Friday, October 31, 2014

In several posts, I have tried to track how successful the ACA exchanges were in steering lower-income buyers of private plans toward silver plans, the only metal level at which subsidies that reduce deductibles and out-of-pocket costs are available. Low-income buyers of bronze plans, which offer low premiums but sky-high deductibles, forfeit access to these Cost Sharing Reduction (CSR) subsidies, which radically reduce costs for those with household incomes under 200% of the Federal Poverty Level and phase out at 250% FPL.

On the whole, the news is good, though information that correlates metal level selection with buyers' income is sketchy. In New York, the only state that breaks out metal level selection by income bracket, 89% of buyers under 200% FPL chose silver plans and so took advantage of CSR. In the federal exchange, only 15% of buyers who qualified for any kind of subsidy bought bronze plans.

Bronze plan selection varies quite a bit by state, however, for reasons that are hard to tease out. For starters, more people on average bought bronze in the 14 states (plus D.C.) that built their own exchanges -- most of which are also among the wealthier states.

State per capita income seems to affect metal level selection. interacting with other factors such as premium prices, the quality of outreach to the uninsured, whether the state expanded Medicaid (which takes out potential buyers between 100 and 138% FPL), and the age composition of the buying pool.*

My thanks to a friendly stranger on Twitter who put together a scatterplot correlating state median income and bronze plan selection. That led me to the latest census data on median household income by state. Below, I've matched it up with HHS state-by-state data on ACA buyers' metal level selections.

For ACA buyers at all income levels, here are the bronze takeup rates for the thirteen highest- and thirteen lowest-earning states:High income states

The wealthier group averaged 25.7% bronze takeup, while the poorer states averaged 17.2%. There are anomalies in both groups -- New Jersey among the wealthier states, Montana among the poorer ones. States with high bronze takeup include a couple where the state online exchange barely functioned -- Hawaii and Maryland -- and one where it functioned quite well, Colorado.

For the 36 states that relied on the federal exchange, HHS breaks out metal level selection for those who qualified for premium subsidies. i.e. buyers with incomes as high as 400% FPL. That's as close as we can get in most states to a glimpse of the percentage CSR-eligible buyers who bought bronze and so forfeited CSR - that is, buyers with incomes under 250% FPL, and under 200% for really strong CSR.

Among the subsidy-eligible in the 36 states on the federal exchange, in descending order of median household income, here are the bronze takeup rates:

While the twelve highest-income states in this group, again, have a higher average bronze takeup rate than the rest, 18.25%, the middle and lower-income group averages are virtually identical, at 15.33% and 15.58% respectively.

There are some real mysteries in these figures. In Mississippi, as I've noted before. the premium price spread between bronze and silver plans was stark, in-person help with the shopping process was in short supply, and the client base was very poor -- yet almost no one selected bronze. Pennsylvania, a middle-income state, had an anomalously low bronze takeup rate, as did high-income New Jersey.

Income interacts with other factors in complex ways. In states with high premiums, like New York, bronze might be a good choice for healthy people with incomes over 200% FPL, as CSR weakens considerably at that level -- and in fact, in New York, silver plan selection drops precipitously to 59% between among buyers with incomes between 200 and 250% FPL. Younger people with some financial cushion -- a few thousand dollars in savings, or parents with means -- might be more inclined to gamble on bronze -- two or three thousand dollars in extra out-of-pocket costs might be at stake in a given year. New York has a lot of wealthy people and a lot of poor people and is in fact a middle income state. It had a bronze plan selection rate close to the mean and platinum plan takeup way above it (13%, as opposed to a 5% national average).

My inferences thus far are that 1) in wealthier states, more people have more options, and a higher level of bronze takeup may be appropriate, 2) in many though not most poor states, a heartening percentage of buyers chose silver plans, and 3) overall, given the balkiness of the online exchanges and the scarcity of in-person help,a large majority seem to have made the right choice at least of metal level. I'll continue to explore this.
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* Some factors appear to matter less than meets the eye. Metal level selection doesn't vary much by age. Some states with vigorous outreach had very high bronze selection, while some in which buyers were largely left to their own devices -- e.g., Mississippi, had very low bronze takeup.